Gannon Ken Van Dyke, a 38-year-old special forces soldier stationed at Fort Bragg, North Carolina, had access to confidential, non-public information about the operation that led to the arrest of Venezuelan President Nicolas Maduro when he placed more than $30,000 across 13 bets on the crypto-based prediction platform Polymarket, the US Department of Justice said Thursday. He placed most of his bets on the night of January 2, just hours before the first missiles struck Caracas, and walked away with $409,881 in profit.
Van Dyke had “participated in the planning and execution” of the operation that captured Maduro and brought him to the United States to face narcotics trafficking charges, according to the DOJ, with charges that together carry a maximum sentence of 50 years in prison.
Polymarket said it had reported the bettor to authorities and cooperated with the investigation. “Insider trading has no place on Polymarket,” the company posted on X, adding that the arrest “proves the system works”.
A systemic problem
However spectacular, this case is the sharpest illustration yet of a vulnerability that has been building alongside the explosive growth of prediction market platforms where users bet real money on whether future events will occur. Polymarket and its main US competitor Kalshi have together attracted hundreds of millions of dollars in wagers on everything from election outcomes to military strikes.
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Alex Goldenberg, an analyst who studies information threats linked to financial markets, underlines that the Van Dyke case represents only one dimension of the risk. “The most worrying thing is insider trading based on classified information, not just for the moral dimension, but for the potential for information leakage to our adversaries,” says the fellow researcher at Rutgers University’s Miller Center on Policing and Community Resilience.
“If Iran, Russia or China were monitoring order flows on Polymarket the night before a military strike, they could have seen a signal. Not realising that our adversaries can use this information would be foolish.”
“Even outside military contexts, using non-public information for profit is problematic,” argues Joshua Mitts, a securities law professor at Columbia University, who says the issue goes far beyond soldiers seeking financial gain. “On the ground, it also introduces an additional layer of risk: it can endanger soldiers’ safety.”
A pattern of manipulation
The Venezuelan case did not emerge in a vacuum. In recent months, prediction markets have been rocked by a string of alleged manipulation attempts.
In March, an Israeli journalist said he received death threats from Polymarket bettors demanding he amends an article whose details were being used to settle bets on an Iranian missile strike. That same month, suspicious trading on oil futures markets minutes before a Trump announcement about Iran negotiations prompted accusations of insider trading that have yet to result in charges.
Six accounts on Polymarket collected $1.2 million after betting on a US strike against Iran on February 28, the day the offensive began. No arrests have been made in connection with those trades as of today.
Earlier, a separate scandal emerged when an employee at the Institute for the Study of War, a Washington think tank, was fired after an online map it maintained briefly and erroneously showed a Ukrainian town as having fallen to Russian forces, a determination used to settle war-related bets on the platform.
In Paris, France’s national weather service Météo-France filed a complaint with police at Charles de Gaulle Airport this week over suspected tampering with a weather monitoring station, after anomalous temperature spikes at the site generated thousands of dollars in winnings for Polymarket bettors.
Regulation scrambling to catch up
The legal framework governing these platforms remains unsettled. Prediction markets have traditionally fallen under state-level gambling regulation in the United States, but the cross-border, crypto-denominated nature of platforms like Polymarket has pushed the debate towards federal oversight, most likely by the Commodity Futures Trading Commission, according to Mitts.
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Kalshi is already subject to the oversight of the Commodity Futures Trading Commission (CFTC), the US federal derivatives regulator. Polymarket, by contrast, has historically operated outside that federal framework: in 2022, the CFTC took enforcement action against the company for offering unregistered event-based markets, prompting it to block US users and continue its activity primarily offshore through crypto infrastructure.
Goldenberg notes that the structural incentives are difficult to eliminate. “If you create the financial reward structure, people will take advantage of it,” he said. “The question now is whether regulators are seriously considering how to monitor for activity with geopolitical consequences.”
President Donald Trump, whose son Donald Trump Jr. is a partner at 1789 Capital – an investment firm that backed Polymarket last year – addressed the scandal with ambivalence. “The whole world has unfortunately become somewhat of a casino,” he told reporters Thursday. “I think that I’m not happy with any of this.”
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